By Clyde Noel

Stock Report

Remember when Alan Greenspan was talking about “irrational exuberance” and the stock market? Now, Richard Grasso, the chairman of the New York Stock Exchange, has coined a new phrase. He said the market is in an “irrational depression” that won’t turn around overnight.

Grasso told hundreds of traders that only reform, not profits, will regain the public’s trust after a slew of corporate accounting scandals helped push the Dow Jones industrial average down 22 percent this year.

On the brighter side, all three indexes recorded their first weekly gain in seven weeks, with the Dow rising 4.3 percent, the Nasdaq climbing 6.23 percent and the Town Crier index up 5 percent.

The market still has a lot to prove in order to signal an upward move, but a resistance was broken at 7,500 on the Dow and 1,160 on the Nasdaq. The next levels should be 8,000 on the Dow and 1,260 on the Nasdaq.

What may be a challenge to this movement is that a slew of big companies are expected to report their quarterly results this week. This includes 14 of the 30 companies that make up the Dow industrials. Locally, several Town Crier stocks are scheduled to reveal their quarterly profits, including Intel yesterday and Sun Microsystems tomorrow.

Market psychology plays a big part in earnings reports. The worst case scenario has been with us the last six weeks, and with GE meeting its estimates last week and IBM receiving a brokerage upgrade, it tells us that things aren’t super but they aren’t that bad either.

Although 34 of the Town Crier stocks were positive and only 16 lower, there were several good movers. Yahoo was up 43 percent; Network Associates, 31.82 percent; BEA Systems, 15.44 percent; Intel, 11.8 percent; and Veritas, 11.70 percent.

The psychology of the market may be changing since the University of Michigan reported consumer sentiment in October dropped unexpectedly to 80.4 from 86.1 in September. This is the lowest since the fall of 1993. With the market up last week in light of this consumer sentiment figure, does this mean a stock rally is in the future?

When stocks surged last week, the U.S. Treasury yields suffered their steepest single-session spike this year. Prices on the 10-year note fell more than a point and those on the 30-year almost two points.

The 10-year yield, which moves in the opposite direction to prices, leaped to 3.8 percent. It seems that bonds are overbought and equities are oversold and both are due for a correction.

So, as people leave bonds for equities again, have you noticed that gold stocks are coming down? Another indication that changes are on the horizon.

In Grasso’s speech at the Security Traders Association annual conference in Boca Raton, Fla., he said that in 10 years people would question why this country went from irrational exuberance to irrational depression during 1997 to 2002. “We have seen cycles in the market many times, and this is still the greatest platform on Earth.”